SWOT Analysis of Serbia and Montenegro’s Accession to the EU Jurij Bajec, Nikola Fabris, Jelena Galic, Svetlana Mitrovic and Marina Spasic Center of Economic Research, Economics Institute, Belgrade, Serbia and Montenegro (E-mail: JBajec@ecinst.org.yu, NFabris@ecinst.org.yu, JGalic@ecinst.org.yu, SMitrovic@ecinst.org.yu, mspasic@ecinst.org.yu) Abstract. The first generation of reforms in Serbia, especially in 2001À2002, was carried out “by the book” but the initial successful results blurred and concealed numerous problems that, especially in 2003, were becoming more evident and, finally, caused a delay in, and the blockade of, the further reform processes. It turned out that the political e ´lite failed to reach a consensus on the second generation of reforms which, above all, refers to the rounding-off and functioning of the institutions of a market economy and the rule of law in full. After the October 2000 changes, relations between the FRY/SM and the European Union have altered dramatically. Joining the EU became strategic priority of our foreign policy, as well as reintegration of the SM in the international community. Nevertheless, these processes have their strengths and weaknesses, potential opportunities and threats, which are summarized in this paper. Keywords: transition, EU accession, SWOT, Serbia and Montenegro. The acceleration of reforms and transition process The favorable conditions for the acceleration of reforms and transition pro- cesses in Serbia were provided only after radical political changes in October 2000. At the moment of coming to power, the new democratic Government was faced with two, equally serious problems. On the one hand, citizens had high expectations regarding rapid increase of their standard of living after the real economic and social collapse as the result of ten years of isolation, breakdown of the former Yugoslav market, armed conflicts in the sur- roundings and NATO bombing of the country in 1999. On the other hand, it was necessary to accelerate reforms to a maximum, thus making up, at least to a degree, for a ten-year delay in transition processes, as compared to other Transition Studies Review (2004) 11 (3): 42À56 DOI 10.1007/s11300-004-0004-1 Transition Studies Review Ó Springer-Verlag 2004 Printed in Austria